Things You Want to Know about the Asia-Pacific Charter Market – Charter Report 2022

Asian Sky Group talked to Daniel Tsang, a charter expert in Asia-Pacific to gain some additional insights.

What are the differences between the VIP passenger charter market in Asia-Pacific, and the rest of the world?

From a regulatory perspective, several popular Asian destinations, including South Korea, Japan, Philippines, China, Thailand, Taiwan, all have their own cabotage regulations, which means that foreign registered aircraft are unable to perform domestic flights. In the US, cabotage rules allow foreign chartered aircraft to operate domestic routes as long as they are carrying the same passengers from the same flight that first entered the US.

The purpose of cabotage is to protect domestic operators, but it increases the price for VIP passengers significantly in the Asia-Pacific market, as local operators providing luxury-chartered flights are always in short supply.

Moreover, it is always hard for charter brokers to find a light to mid-size jet to operate within Asia-Pacific. Business jet owners in Asia-Pacific tend to purchase a heavy size – ultra long-range aircraft, as they often need to fly long distances. VIP charter passengers often have no choice but to use a bigger jet, which of course increases the cost of the charter.

What impact did the COVID-19 pandemic have on the charter market, and are those effects still being felt?

COVID-19 had a big impact on the Asia-Pacific charter market, as borders were closed and people could not travel between countries in Asia-Pacific as we don’t have a central regulator (something like the European Union) that coordinates a covid entry policy for the entire Asia-Pacific region.

I would also say that charter flight prices have fluctuated wildly during the pandemic, mostly because of operational difficulties and a decrease in demand.

Although the number of charter flight activities has not returned to the level before the pandemic in 2019, we have seen an increase in people that have not used business jets before, especially on domestic flights. Part of this has been due to the general decrease in airline schedules, but we have also seen people flying on business jets for the first time for the relative safety that they offer – not only in the air, but also on the ground as private jets mostly use their own terminals.

One trend that we have witnessed is an increase in activity in Southeast Asia, which began really picking up from the second quarter of 2022, which is due to countries in the subregion relaxing, or in some cases, completely removing COVID-19 restrictions. Activity in the subregion has been so brisk that we have seen some East Asian operators temporarily move their aircraft in to the subregion to try and win some more activity.

Whilst Southeast Asia largely opened up in Q2, towards the end of third quarter, and especially as we move further into Q4, we have seen north Asian countries begin to open up or significantly reduce the restrictions that they had in place. I’d expect this to have a very positive impact on the charter market as we race towards the end of the year, and especially into the first half of 2023.

Are there any defining characteristics or trends that you have noticed in the Southeast Asia and Greater China charter markets?

Southeast Asia has huge potential to grow. We can see there are only few charter operators that are in a similar league to the big international operators.

With the geo-economic shift to Southeast Asia, I believe that we will see more operators emerging to capture the potential market in the region.”

Greater China consists of mainland China, Hong Kong, Macao and Taiwan and each of the locations has their own characteristics. Mainland China is currently focused on domestic flights as it has comparatively stricter COVID-19 entry policies with little no sign that this will be changing any time soon. Macao used to be an alternative airport for Hong Kong and catered to a lot of casino related activity. However, Macao also has a very strict entry policy these days due to COVID-19. However, Macao recently opened up its border to mainland China and it is expected that there will be increased charter activity from mainland China to Macau. Understandably so, charter activity is rather limited to and from Taiwan as there is only one premium operator and Taiwan strongly enforces its cabotage regulations.